Build It and will They Come? The Effect of Investing in Cultural Consumption Amenities in Higher Education on Student-Level Outcomes

Despite a climate of fiscal scarcity, higher education institutions are making big investments in campus consumption amenities while reducing instructional expenditures and growing increasingly reliant on tuition revenue. Few empirical studies exist exploring why universities increasingly invest in these amenities; however, one compelling explanation is that in an increasingly competitive market universities use amenities as a means of attracting students. Using resource dependency theory, this article examines these investments through the lens of marketization of public services. A unique dataset of HEI investments in cultural consumption amenities from 2000 to 2016 is used to estimate the effect of investing in cultural consumption amenities on various student-level outcomes. The evidence suggests that consumption amenities investments are associated with an increase in the yield rate (the proportion of admitted students who choose to enroll in the institution) and a decrease in the percentage of students paying in-state tuition. Also, higher-value investments are associated with a modest increase in out-of-state tuition, a decrease in in-state and out-of-state fees, and an increase in SAT scores. Taken together, the findings suggest that cultural consumption amenities investments may help attract more lucrative students and students who are strongly considering enrolling (as indicated by their application).